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Delhi Wine Club

Posted: Wednesday, January 06 2010. 10:42

Mumbai Court Upholds Higher Excise Duties

The Bombay High Court has upheld the hike in duties imposed by Maharashtra on imported foreign wines and liquor and rejected the petition of an importer, upholding the government stand of classifying and treating them differently, according to  newspaper reports.

Karan Nevatia an importer and distributer of imported  wines under the Foreign Liquor-I license since 2008 under the name of  Kunal Vintners , had challenged several government notifications issued from 2006 to 2009, hiking duties on foreign liquor.

He had contended that the state discriminated between locally produced wines and imported wines in gross violation of the central government’s trade agreements with 153 countries around the world.

Arguing for the Centre, additional solicitor general DJ Khambata had contended that in case of local laws contrary to international agreements, the local law would prevail.

The High Court Bench of Justices Ranjana Desai and Amjad Sayed disagreed with the wine importer’s stand and said, "Since imported wines never loose their character as imported wines, if they are classified as a group and subjected to heavier duty, the classification would be reasonable and founded on an intelligible differentia.", says the report in TOI

The judgment may not have much impact of the government policy. During the period 2006-09, the excise duty had been increased on imported wines progressively, first to Rs 200, then Rs.300 a bottle and in 2007 it shot up to 150% and eventually 200% of the assessable value while the central government had waived the Additional custom duty but increased the customs duty from 100% to 150% in July 2007. However, under constant pressure from EU and WTO, the duties have been substantially brought down to around Rs. 200-300 a bottle based on slab rates. Most importers, retailers and on-premise customers find the current reduced duties quite tenable.

However, in Delhi where the excise duties are playing havoc with the increase to 20-30% of the MRP (Maximum Retail Price) this fiscal year have made the imported wines too expensive- a lot more than in Maharashtra. However, EU is still putting a lot of pressure on the central government and threatening to go to WTO which if satisfied by the complaint can impose sanctions-a matter beyond the purview of courts.



Subhash Arora Says:

I agree with you, Tony. But this was a legal issue-the guy should not have gone to the court. The executive decision lies with the government. WTO has been putting pressure and getting some results. The excise has been reduced by the government in Maharashtra since the case was filed by the government. The customs duties are still high but within the agreement with WTO. We need to cajole the government to understand that wine is good for health-that it is not the same as spirits, and that drinking improted wine is not necessarily luxury and that even if it is, they should charge the similar duties as on luxury products. But this may take time, a long time. It is for us to continue with our efforts.

Posted @ January 18, 2010 15:20


Tony Devitt Says:

Hi Subhash, This decision is not in the best interests of the Indian wine industry and doesn't create much goodwill between wine producers overseas and the Indian Government. As you would know from other situations where discriminatory tariffs have been imposed some very negative situations have arisen. Decisions like this will isolate the Indian wine industry. Regards Tony.

Posted @ January 18, 2010 12:55


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